lundi 24 juin 2013

London’s
tech scene has been growing for years — is it finally on the cusp of
breaking out and delivering billion-dollar startups?

Down a flight of stairs, past a photo of British mod icon Paul
Weller, and into the basement of Google’s campus in the ultra hip area
of East London, sit Britain’s home-grown budding Kevin Systroms and
David Karps (well, at least wannabes). On a weekday afternoon, almost
every seat, desk, couch and stool in the free co-working café in
Google’s basement is filled with young web and mobile entrepreneurs,
hunched over their laptops, building decks, and chatting excitedly about
their next big idea.

Google London Campus, image courtesy of Google.

Every major city it seems these days has its techie hubs, but
London’s tech scene has been steadily growing over the past several
years. That growth is being driven by a combination of increased
government support, attention from international internet giants, a
handful of early startup successes, a growing venture capital ecosystem,
an adjacent London financial sector that’s starting to take notice of
tech, and an early adopter city that’s not unlike the one in San
Francisco, which enables the Valley’s startups to access some of the
world’s most engaged beta testers.
It’s way too easy to make the comparison between Silicon Valley of a
few years back and the East London of today. Many of the London
entrepreneurs I’ve met with since I moved to the Shoreditch area of
London for the summer to grow GigaOM’s coverage of the London tech scene
warn me away from that simplistic “the Valley of Europe” discussion.
Please don’t write one of those X is the new Silicon Valley stories, one
founder practically pleaded with me. Needless to say, X could be
anywhere these days, from New York, to Sao Paulo to Berlin, to New Delhi.

The growth of London tech

But something’s clearly been brewing for a couple years now. To Simon
Thethi, the founder of the news site that launched in January of this
year to cover London tech, Tech City News,
it was clear even back in 2010 that London was starting to develop into
a buzzing tech hub. But now it’s really got an energy that makes it
stand out, says Thethi, while we sit and drink coffee on the rooftop
terrace of one of London’s many membership clubs that the tech community
seem to often use as meeting space.

The Shoreditch Grind espresso bar in East London

“Tech City” is a name for London’s tech scene that’s emerged – like
most city trends do — both organically and through a little inorganic
help. The U.K. government is investing
50 million pounds ($70 million) into building out Tech City and
attracting tech companies to the region from Microsoft to Amazon to
Qualcomm. According to London Partners,
a group that promotes Tech City, there’s 3,000 tech companies in the
condensed area of East London, which they say makes it Europe’s
fastest-growing tech cluster. London and Berlin have a healthy rivalry going on over which city’s tech sector is bigger and growing more rapidly.

Internet giants, too, are investing in London. In addition to
Google’s London campus, which opened a year ago, the giant search engine
has its British headquarters in the Victoria and Holborn districts, and
is building out a billion-pound campus in Kings Cross. Facebook has one of its largest offices in London,
boasting 29 open positions. Jobs are one of the key reasons that the
British government is aggressively promoting the tech sector, in the
wake of Europe’s recession.
But London’s got its own unique slant to the startup wave. Given that
London boasts a huge financial industry, a thriving media sector and
some of the world’s largest advertising and design firms, it’s natural
that London startups would gravitate to these areas. It’s more New York
than Silicon Valley (oops, I did it again). At an event thrown earlier this week
by the BBC’s commercial division, BBC World, the media company
announced its next class of six digital media startups that would join
its accelerator program, BBC Labs.

An emerging sector

Still, London’s tech scene is decidedly still emerging. The biggest
homegrown startups, like game company Mind Candy, on-demand ride startup
Hailo, social chat platform Badoo, and music recognition company
Shazam, aren’t blockbuster global brands yet and more importantly
haven’t created a wave of millionaire VPs like Valley internet firms
Facebook, Google and PayPal. The creation of wealth through these Valley
web exits delivered (and are delivering) the next wave of founders (see
the PayPal mafia).
London has yet to kick off that wave. And it is still waiting for its first billion-dollar tech company. Mind Candy has been eyeing an IPO,
which could be “Tech City’s” first flotation. But the worst thing that
could happen for the East London tech crowd is if a homegrown company
like Mind Candy went public in New York and even moved operations there.
The message would be: Once a startup gets big enough it outgrows
London.

The official Silicon Roundabout, a name that was originally coined as a joke.

There are also a couple of cultural disconnects that seem to be
holding back some of the growth of London’s startup scene. One of those
is what entrepreneurs describe as a lack of aggressiveness in scaling
companies for the big exit – selling at the first offer instead of
building startups into billion-dollar businesses. Several entrepreneurs
I’ve spoken with this week say this is a key hurdle that is holding back
London web startups from reaching that billion-dollar threshold.
Another is the omnipresent — and very natural — fear of failure,
which is prevalent in most early startup scenes, but has somehow been
shaken out of the pivot-loving, failure-embracing crazy founders of the
Valley. Fear of failure can harm a startup ecosystem because
entrepreneurs and investors are less willing to take big risks, which
leads to less disruptive ideas.
As more successes emerge from London’s tech hub, many of these
hurdles will likely be cleared. But for now, Tech City has a whole lot
of potential that’s still waiting for some big payoffs.
We think the city has enough tech potential that we’re holding our second annual Structure:Europe conference in London in September, and we’re looking for cloud-enabled and cloud-focused startups to join our Startup Zone.